Penn Entertainment has recently announced plans to lay off approximately 100 employees as part of its focus on the growth of ESPN Bet. CEO Jay Snowden explained in an internal email that these changes are intended to enhance operational efficiencies following the company’s acquisition of theScore in 2021. Despite employing about 20,000 people, the company is now prioritizing the development of its proprietary technology stack and the migration of its sportsbook to theScore’s platform.
The company is entering a new phase of growth in its interactive business segment, particularly with the ESPN Bet partnership valued at $2 billion with Disney’s ESPN. Snowden highlighted the upcoming product enhancements and deeper integration into ESPN’s ecosystem as part of their strategic initiatives. Investors are eagerly anticipating the success of the rebranded sportsbook, with pressure mounting from activist investors like Donerail Group to sell the casino company.
Rumors have circulated regarding potential interest from other online gaming and traditional casino companies in acquiring Penn Entertainment. Analyst Barry Jonas from Truist believes that a sale in the near future is unlikely due to the complexity of such a transaction, which would likely involve significant divestitures. Despite Penn’s struggles with missed earnings expectations and reduced guidance, Jonas remains optimistic about the company’s release of new ESPN Bet features during the upcoming football season.
Investors are eager to see the impact of ESPN Bet’s success on Penn Entertainment’s financial performance and are curious about the additional investment required beyond the current guidance. With Penn’s shares declining by 25% year-to-date, there is pressure on the company to deliver positive results and prove the value of its strategic partnerships. Truist has maintained a buy rating on Penn Entertainment with a price target of $25, indicating some level of confidence in the company’s potential despite its recent challenges.
Penn Entertainment’s decision to lay off employees while focusing on the growth of ESPN Bet reflects the company’s strategic priorities and ambitions in the competitive sports betting market. The upcoming developments in its interactive business segment will be closely watched by investors and analysts alike, as the company navigates through a period of transformation and adaptation to meet the evolving demands of the industry.